COVID-19 has impacted many businesses and one of the companies that is significantly impacted is Rolls Royce. The price of Rolls Royce is drastically lower if we compare vs last year and even in the last month the price has gone down significantly.
Rolls Royce generates revenues from different category and Aerospace is one of the main revenue generators. With airlines as well as aerospace industry down, it has significantly impacted the company and its revenues.
In this video, we analyse the reason behind the decline in the share price. One of the main reasons for the decline of share price is that the company is struggling to manage its operations due to cash flows and less sales. Thus, to raise more capital, the company is using different sources to raise additional funds.
One of the main ways in which the company is raising the funds is through right issue. Right issues give the option to the existing shareholders and the company raised £2 Billion through right issues. Moreover, £1 billion was raised through bonds. This will help the company to manage its operations and company would be able to survive this pandemic.
We analyse the price of the stock and in one month the share price has gone down from 240 to 98. Moreover, 52 weeks average price was 746 and if it reached to that level then you can have returns of 7.5x
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Disclaimer: This video shares personal opinion and experience. While making investments decisions it is important to keep your financial objectives in mind and invest accordingly. Some of the information shared in the video are publicly available and we believe are reliable source of information. Also please note that stocks may go up and down and therefore while investing it is important to keep this in mind. Past performances can only be indicative and may not always define the future trend.
